I have penned a few articles on issues involving the commerciality of various items being procured by the US Government. Basically, the idea is that if the seller can show that an item is commercial, as in sold to non-governmental customers for other than governmental purposes, then the requirement to provide certified cost and pricing data with the proposal is waived. This requirement stems from the Truth in Negotiations Act (TINA), which requires contractors to certify their prices for contracts or contract line items exceeding $2 million. Not only does the certification of this cost and pricing data incur additional costs for accounting and cost-estimating systems, but it also entails a penalty if the pricing is found to be defective. Plus, when the contractor is required to show the costs involved in their price, then the negotiations are much more transparent, and their profit margin is much more subject to scrutiny. So, it is easy to see why contractors are eager to claim as many of their proposed products and services are commercial.
In recent years, the US Government, and specifically the Department of Defense, has placed ever greater emphasis on procuring commercial items. As part of acquisition streamlining and reducing the Procurement Action Lead Time (PALT) for contracts, DoD has broadly expanded the guidance and implementation of policy that supports increased use of commercial purchasing procedures. For instance, recent DoD policy language indicates that an existing CID from one DoD PCO will serve as precedent across the Department, resulting in commerciality for this product in all future procurements. Moreover, previous FAR Part 12 (Commercial) contracts will also serve as precedent for finding current and future procurements to be commercial. As such, this effort has vastly increased the responsibility and workload of Procuring Contracting Officers in preparing and issuing Commercial Item Determinations (CIDs). In some relief of that increased burden, the FAR directs that prime contractors issue CIDs for their subcontractors that assert commerciality for their respective products. Still, the PCO must review those CIDs, and then prepare CIDs for all prime contracts with appropriate commercial items.
To date, few PCOs profess expertise in understanding all the various aspects of commerciality as outlined in the FAR 2.101 definition, let alone in preparing and issuing CIDs. To that end, Congress has passed statutory language charging the DoD to establish a cadre of experts to assess and recommend commerciality in support of the vast range of DoD procuring activities. DoD has designated the Defense Contract Management Agency (DCMA) as the proponent of this cadre, which established a Commercial Item Group (CIG) within its Cost and Pricing Center. This CIG supports PCOs and other requesting customers by evaluating proposals and commerciality assertions and CIDs, and then recommending to the PCO whether the proposed items do in fact meet the definition of commerciality found in FAR 2.101. The decision is ultimately left to the PCO, but the CIG recommendation is carrying more and more weight in that decision. Which leads to the next phase in the evolution of DoD’s approach to commerciality in procurement, namely, the authority to issue CIDs.
Beginning in FY2019, the CIG will have a select few senior analysts that will be issued warrants granting authority to issue CIDs. These warrants are limited only to the issuance of CIDs, and do not involve the obligation of funds, but still represent a significant development in the general trend of commercial procurements within DoD. For instance, PCOs will now have the option of retaining their authority to issue a CID for their contract action or delegating that responsibility to the CIG. Additionally, the CIG is in the process of establishing and maintaining a central database of all CIDs across the Department, providing a repository of knowledge and historical research and analysis to all current and future PCOs. So in the near term, the workload and challenges appear daunting, but as time passes, and systems and processes mature and become codified, the overall effect should greatly ease the burden on PCOs and contracting activities, and leave them to focus on the day to day pre-award and contract management effort.